FEATURE PRODUCTIVITY
PRODUCTIVITY CRISIS IS THE UK’S ‘LOST DECADE’ AT AN END?
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n ‘unprecedented’ slowdown in UK productivity has stifled ambition and growth – and tackling the issue must be a priority for both industry and government, according to business leaders.
It’s been more than ten years since the global financial crash, but its effects are still being felt – not least, in the UK’s stagnant levels of productivity. "It has taken the UK a decade to deliver 2% growth, which historically was achieved in a single year,” says Richard Heys, Deputy Chief Economist at the Office for National Statistics (ONS). Experts say the slowdown has had an ‘unprecedented’ impact on the nation’s output – but is there any solution in sight for the UK’s ‘productivity puzzle’? What’s the problem? It’s difficult to overstate the importance of Business Leader - Inspire • Inform • Connect
productivity for a company, a sector, or even a nation. It’s a line oft-quoted, but Nobel Prizewinning economist Paul Krugman once said: “Productivity isn't everything, but in the long run it is almost everything. A country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.” Yet that is a challenge which has been firmly beyond the UK over the past decade. ONS data reveals labour productivity has been lower over the past ten years than at any time in the 20th century – but in truth, the UK’s ‘lost decade’ compares unfavourably with other eras from even beyond that timeframe. Nicholas Crafts, of the University of Sussex, and Terence Mills of Loughborough University, are two of the country’s leading economic historians, and their joint research reveals the current downtown is actually the worst the country has ever faced.
Their analysis compares today’s picture with past economic slumps, and reveals not only how much has been lost, but also casts light on the underlying reasons. They said: “We find the current productivity slowdown has resulted in productivity being 19.7% below the pre-2008 trend path in 2018.
"JUST ABOUT THE ONLY WAY TO IMPROVE THE UK’S STANDARD OF LIVING AND THEREBY CREATE THE KIND OF SOCIETY TO WHICH WE ALL ASPIRE IS BY RAISING THE LEVEL OF OUTPUT PER WORKER. THAT’S WHY WE MUST STRAIN EVERY SINEW TO INCREASE BRITISH PRODUCTIVITY.” Sir Richard Lambert, Chairman, British Museum
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